Potentially good news for opponents of personal responsibility–you will no longer be required to exercise it when it comes to financing your college education, if the President gets his way.  Proposals Would Transform College Aid

Obama Plan to Expand Federal Control of Lending Includes Creating Entitlement

President Obama’s health-care goals may be garnering attention, but his higher-education proposals are no less ambitious.

If adopted, they could transform the financial aid landscape for millions of students while expanding federal authority to a degree that even Democrats concede is controversial.

At stake is a plan to expand the Pell Grant program, making it an entitlement akin to Medicare and Social Security. Key to the effort is a consolidation of student lending that would give the U.S. Department of Education a near monopoly over the practice — a proposal that has mobilized the private loan industry, which lent $55.3 billion to 6.4 million students in the 2007-2008 school year.

It sounds to me that the plan has mechanisms for funding similar to the proposed cap and tax program, which redistributes the money generated by the fake emissions permits market and paid directly through higher energy costs by everybody to some favored constituencies.  This one would take the profits from the monopolistic government loan agency, which will be able to set whetever terms it chooses, and redirect some of it to selected people:

But Obama would go much further. He wants to terminate the private Federal Family Education Loan program, the primary source of student loans. Advocates say the move is a formality: The government already effectively controls the program by guaranteeing the loans, paying a special allowance to lenders, and in recent months, buying back loans by the billions from struggling firms.

Shifting all lending authority to the government through its Direct Loan program would save $94 billion over 10 years, according to the Congressional Budget Office. Obama would use that windfall to expand the Pell Grant program, created in 1965 to cover most tuition costs for low-income students.

So the government already effectively controls the market, and yet it is still a mess, the best fix for which is more government control.  Starting to see a pattern yet, Obama fans?

The President’s remarks about this mind-bogglingly expensive new entitlement program–Who are you going to believe, your lying rational mind or me?

“In the end, this is not about growing the size of government or relying on the free market — because it’s not a free market when we have a student loan system that’s rigged to reward private lenders without any risk.”

In other words, it’s not about what it’s about.  In Obama-speak a new entitlement program run by a new Federal bureaucracy is not increasing the size of government.  It’s a free market when students have only one lender to go to.  There’s no risk to lenders when borrowers default.  Orange is green, water is dry, cats are the most dependent creatures on Earth.

The one-size-fits-all approach inherent in any bureaucracy will pose problems:

Industry officials contend that private loans provide stronger default protections and better serve smaller schools, and some institutions have suggested that they may be content to play a more limited role. Industry officials are urging lawmakers to convene a summit of industry leaders to search for middle ground. But they also acknowledge that the prospect of capturing $94 billion and directing it to Pell Grant assistance could prove hard for Congress to resist.

According to the article, not much opposition to this new power grab has surfaced yet.  One opponent:

Rep.  Timothy H. Bishop (D-N.Y.), a former college provost and a member of Miller’s committee, said the lending proposal “goes to the very heart of one’s perception of what is the role of the federal government. And I think there will be a significant fight over it.”

But he added, “If you just look at it from the practical aspects of how the program functions, it’s really hard to justify. Why do we need a middleman?”

Why, indeed, an objection that can be made to most Federal programs.

In the free market, businesses are accountable to customers.  If you don’t like the price, you can buy somewhere else.  In order to get or keep customers, businesses can lower their prices, or offer different services, in other words, compete with each other.  Financing higher education is a business that has been subject to free market conditions, albeit with a fairly high dose of government meddling, like every other part of the financial sector.  If the Obama plan flies, that whole dynamic disappears.  You’ll take what the government gives you and like it.  There will be no shopping around because there will be no one else to do business with.  No more confusing choices to make–no more choices, period.

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